CHAPTER 8: LEARNING OUTCOMES Explain integrations and the role they play in connecting a corporation. Describe supply chain management and its role in supporting business operations. Identify the benefits and challenges of SCM along with its future. Describe customer relationship management and its role in supporting business operations. Identify the benefits and challenges of CRM along with its future. Describe enterprise resource management and its role in supporting business operations. Identify the benefits and challenges of ERP along with the future of the connected corporation.

BUILDING A CONNECTED CORPORATION THROUGH INTEGRATIONS Integration—Allows separate systems to communicate directly with each other, eliminating the need for manual entry into multiple systems Integration Tools Enterprise System—Provide enterprisewide support and data access for a firm’s operations and business processes Enterprise Application Integration (EAI)—Connects the plans, methods, and tools aimed at integrating separate enterprise systems Middleware—Several different types of software that sit between and provide connectivity for two or more software applications Enterprise Application Integration Middleware—Packs commonly used applications together, reducing the time needed to integrate applications from multiple vendors

SUPPLY CHAIN MANAGEMENT Supply Chain Management (SCM)—The management of information flows between and among activities in a supply chain to maximize total supply chain effectiveness and profitability The supply chain has three main links: Materials flow from suppliers and their “upstream” suppliers at all levels. Transformation of materials into semifinished and finished products through the organization’s own production process. Distribution of products to customers and their “downstream” customers at all levels.

THE BENEFITS OF SCM Improved Visibility Supply Chain Visibility—The ability to view all areas up and down the supply chain in real time Supply Chain Planning System—Uses advanced mathematical algorithms to improve the flow and efficiency of the supply chain while reducing inventory Supply Chain Execution System—Automates the different activities of the supply chain Bullwhip Effect—Occurs when distorted product demand information ripples from one partner to the next throughout the supply chain

THE BENEFITS OF SCM Increased Profitability Demand Planning System—Generates demand forecasts using statistical tools and forecasting techniques, so companies can respond faster and more effectively to consumer demands through supply chain enhancements Common supply chain metrics include: Back order Inventory cycle time Customer order cycle time Inventory turnover

THE CHALLENGES & FUTURE OF SCM Primary challenges include: Cost—An SCM system can cost millions of dollars for the software and millions more for help implementing the system Complexity—The move towards globalization is increasing complexity in the supply chain Fastest growing SCM components: Collaborative demand planning Collaborative engineering Selling chain management Supply chain event management (SCEM)

CUSTOMER RELATIONSHIP MANAGEMENT Customer relationship management (CRM)—Involves managing all aspects of a customer’s relationship with an organization to increase customer loyalty and retention and an organization's profitability Many organizations, such as Charles Schwab and Kaiser Permanente, have obtained great success through the implementation of CRM systems

THE BENEFITS OF CRM Evolution of CRM Operational and Analytical CRM CRM Reporting Technology—Help organizations identify their customers across other applications CRM Analysis Technologies—Help organization segment their customers into categories such as best and worst customers CRM Predicting Technologies—Help organizations make predictions regarding customer behavior such as which customers are at risk of leaving Operational and Analytical CRM Operational CRM—Supports traditional transactional processing for day-to-day front-office operations or systems that deal directly with the customers Analytical CRM—Supports back-office operations and strategic analysis and includes all systems that do not deal directly with the customers

THE BENEFITS OF CRM Marketing and Operational CRM Three marketing operational CRM technologies: List generator Campaign management system Cross-selling and up-selling Sales and Operational CRM Sales and operational CRM technologies: Sales management CRM systems Contact management CRM systems Opportunity management CRM systems

THE BENEFITS OF CRM Customer Service and Operational CRM Three customer service operational CRM technologies: Contact center (call center) Web-based self-service system Call scripting system Analytical CRM Analytical CRM relies heavily on data warehousing technologies and business intelligence to glean insights into customer behavior Measuring CRM Success

THE CHALLENGES & FUTURE OF CRM The customer is always right and now has more power than ever thanks to the Internet. Current trends include: Supplier relationship management (SRM) Partner relationship management (PRM) Employee relationship management (ERM)

ENTERPRISE RESOURCE PLANNING Reasons ERP systems are powerful tools: ERP is a logical solution to incompatible applications ERP addresses global information sharing and reporting ERP avoids the pain and expense of fixing legacy systems Core ERP Component—Traditional components included in most ERP systems and they primarily focus on internal operations Extended ERP Component—Extra components that meet the organizational needs not covered by the core components and primarily focus on external operations

THE BENEFITS OF ERP Core ERP Components Accounting and Finance ERP Component—Manages accounting data and financial processes within the enterprise with functions such as general ledger, accounts payable, accounts receivable, budgeting, and asset management Production and Materials Management ERP Component—Handles the various aspects of production planning and execution such as demand forecasting, production scheduling, job cost accounting, and quality control Human Resource ERP Component—Tracks employee information including payroll, benefits, compensation, and performance assessment and assumes compliance with the legal requirements of multiple jurisdictions and tax authorities

THE BENEFITS OF ERP Extended ERP Components: Measuring ERB Success Business intelligence Customer relationship management Supply chain management Ebusiness Measuring ERB Success The learning and growth perspective. The internal business process perspective. The customer perspective. The financial perspective.